Creating a 5-Year Plan For Your Finances

The Cheshire Cat famously told Alice that if she didn't care where she ended up, it didn't matter which way she headed. Think about this when you contemplate making a five-year financial plan. It's not at the top of on anyone's fun list, but the chances of achieving your goals increase when you figure out where you want to go and lay out a road map to get there. Here are some tips to get you started.

Priorities First

Setting goals is important, but goals alone are not enough. Anyone who has ever made New Year's resolutions knows how quickly they can disappear when it comes time to change those destructive habits. That's why you should invest time and effort into making a personal financial plan that you're likely to stick to.

Five years is not the long-term future — it's more like the immediate future — so identify the most important financial goals for you and your family right now. Miranda Marquit, money expert and founder of the blog Planting Money Seeds, emphasizes that setting priorities first is critical. "The first thing you should do is decide on your priorities," she says. "Understand what matters most to you. Unless you know what's important to you, it's impossible to manage money in a way that will allow you to reach your goals."

Evaluating the Gap

Create a very clear picture of the financial gap you hope to bridge in the next five years. Start with detailing where you are now in terms of income, debt and assets, including savings. Then project forward in each category and make note of the goals and priorities you've identified. This may require a reality check. If you have no savings now, setting a goal of $1 million in savings creates a gap too wide to cross in five years. Keep things realistic because the next phase is to set a path from one step to the next.

Road-Mapping Your Future

You'll need a viable road map to create a practical 5-year financial plan. Figure out alternative savings and spending strategies that will lead you in the right direction. These often involve reallocating existing resources, such as cutting spending, or generating new resources, like getting a second job. "After you know what matters to you and what you want your money to accomplish, you can start figuring out what you need to do to get there," Marquit says. "Making your 5-year plan should be about what you hope to accomplish, then breaking down your next moves, whether they involve finding a way to earn more money, investing, paying off debt or saving up for your goals."

Implementing Your Plan

After you've selected your goals and identified the financial alternatives you must adopt to achieve them, you're on your way. Break those five-year goals into five separate years, then divide the first year's goals into 12 one-month segments. For example, if your five-year savings goal is $60,000 for a down payment on a house, that's $12,000 the first year, or $1,000 a month. You'll need to tuck away $250 a week to make that happen. Make daily and weekly goals that will help you get to the finish line the first month.

Don't be thrown off when unforeseen obstacles arise, because they will. You may have to adjust your plan on a regular basis to work through unexpected issues that pop up.

Take the next step towards your financial goals

We can help choose the right Quicken for you

† Limited time offer of 40% off the list price applies only to the purchase of Quicken Deluxe, Premier, Home, Business & Rental Property for the first year only when you order directly from Quicken by Aug 14, 2018, 11:59 PM PDT. Offer good for new memberships only. Offer listed above cannot be combined with any other offers. Terms, conditions, pricing, features, offers and service options subject to change without notice.

Monitoring alerts, data downloads, and feature updates are available through the end of your membership term. Online services require internet access. Third-party terms and additional fees may apply. Phone support, online features, and other services vary and are subject to change. 14,500+ participating financial institutions as of October 1, 2017.

Standard message and data rates may apply for sync, e-mail and text alerts. Visit www.quicken.com/go/apps for details. Quicken app (“App”) is compatible with iPad, iPhone, iPod Touch, Android phones and tablets. Not all Quicken desktop features are available in the App. The App is a companion app and will work only with Quicken 2015 and above desktop products.

Quicken Bill Pay (Bill Payment Services provided by Metavante Payment Services, LLC) is included in Quicken Premier and above and is available on QuickenBillPay.com as a separate add-on service in Starter and Deluxe. 15 payments per month included in Premier and above.

Purchase entitles you to Quicken for 1 or 2 years (depending upon length of membership purchased), starting at purchase. Full payment is charged to your card immediately. At the end of the membership period, membership will automatically renew every year and you will be charged the then-current price (prices subject to change). You may cancel before renewal date. For full details, consult the Quicken License Agreement. You can manage your subscription at your My Account page.

30-day money back guarantee: If you’re not satisfied, return this product to Quicken within 30 days of purchase with your dated receipt for a full refund of the purchase price less shipping and handling fees. See www.quicken.com/30dayguarantee for full details and instructions.

Quicken for Mac software and the Quicken mobile app are not designed to function outside the U.S.

The VantageScore provided under the offer described here uses a proprietary credit scoring model designed by VantageScore Solutions, LLC. There are numerous other credit scores and models in the marketplace, including different VantageScores. Please keep in mind third parties may use a different credit score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.

VantageScore®, Equifax®, Experian® and TransUnion® are registered trademarks of their respective owners.

EQUIFAX is a registered trademark of Equifax Inc. The other Equifax marks used herein are trademarks of Equifax Inc. Other product and company names mentioned herein are property of their respective owners.